AMBIGUITY AS TO DATE DID NOT INVALIDATE A PART 36 OFFER: HIGH COURT DECISION

March 21, 2021 · by · in Costs, Part 36, Proportionality

In  Kings Security Systems Ltd v King & Anor [2021] EWHC 653 (Ch) Andrew Lenon Q.C. (sitting as a Deputy Judge of the Chancery Division) rejected the defendants’ arguments that an ambiguity as to the date meant that a Part 36 offer was not effective.

(It is worth noting that the claimants had spent £2 million in costs to obtain a judgment of £40,666.47, an award of costs of the indemnity basis meant that, for part of the case at least, the assessment would be on an indemnity basis and proportionality would not prevail).

THE CASE

The claimant had succeeded in an an action at trial and recovered damages of £40,666.47. The claimant had made an earlier offer to settle for £30,000.  At a subsequent hearing the defendants argued that the claimant’s Part 36 was not valid.

THE JUDGMENT IN RELATION TO THE VALIDITY OF THE CLAIMANT’S PART 36 OFFER

The judge considered, and rejected, an argument that an ambiguity in the offer made rendered it an ineffective Part 36 offer.

23.KSSL relies on a letter dated 27 June 2019 which was sent by email to Mr King’s solicitors on that date as constituting a Part 36 offer to Mr King pursuant to which it offered to accept the sum of £30,000 in settlement of both its claim and Mr King’s counterclaim. The letter included the following passage:
“This Offer is made pursuant to Part 36 of the Civil Procedure Rules and it is intended to be a claimant’s Part 36 offer. Accordingly, if your client accepts this Offer within 21 days (the relevant period), being by 4 pm on 19 July 2019 or any time thereafter, your client will be liable for our client’s costs, in accordance with CPR 36.13. This Offer will remain open unless and until it is accepted or withdrawn.”

 

    1. KSSL contends that the “relevant period”, within the meaning of CPR 36, expired on 19 July 2019 and that, pursuant to CPR 36.17(1)(b), the judgment awarded by the court against Mr King is at least as advantageous to KSSL as the proposal made in the Part 36 offer.
    1. In his skeleton argument for the hearing on consequential matters, Mr Newman submitted for the first time that the letter was not a valid Part 36 offer. This was on the following grounds.
25.1 CPR Part 36.5(1)(c) requires a Part 36 offer to “specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted”.

 

25.2 The words “or any time thereafter” in the letter did not specify any period. No actual date has been specified, alternatively if the specified date was 19 July 2019, the letter specified a period of less than 21 days, for the following reason. The letter was received by email on 27 June 2019 (17:21). It was never agreed that service would be accepted by email, and so it was served by DX and received by Mr King’s solicitors Walker Morris on Monday 1 July 2019. Whether the letter was collected by the DX on Thursday 27 June 2019 or Friday 28 June 2019, the deemed date of service was 1 July 2019 so the 21-day period ended on 22 July 2019.

    1. In response to this argument, Mr Downes submitted that, assuming in Mr King’s favour that the deemed date of service was 1 July 2019, a reasonable recipient would have assumed that the date of 19 July 2019 mentioned in the letter had been miscalculated. He referred me to the principle stated in the White Book at paragraph 36.2.4 that, even if there are formal or technical defects in a Part 36 offer, the usual costs consequences should follow. He also referred to the recent decision of Pepperall J in Essex County Council v UBB Waste (Essex) Limited [2020] EWHC 2387 (TCC) in which the issue was whether an offer contained in a letter dated 7 March 2019 but not served until 8 March 2019 and which required the defendant to accept the offer “within 21 days of the date of this letter” was a valid Part 36 offer. If the 21 days ran (literally) from the date of the letter, the letter failed to specify a relevant period of less than 21 days from the date of service and was not a valid Part 36 offer. If, however, the 21 days ran not from the date of the letter but from the date of service, the Part 36 offer was valid. Pepperall J held that a reasonable person with all the background knowledge available to the parties would know (amongst other things) that the letter was intended to be a Part 36 offer and that it was not “made” for the purposes of Part 36 until it was served (rule 36.7(2)). The reference to “21 days of the date of this letter” could reasonably be construed in two ways, depending on the start date of the 21-day period. In accordance with the reasoning in C v D [2011] EWCA Civ 646, Pepperall J favoured a construction which was consistent with the clear intention to make a Part 36 offer and which ensured that the Part 36 offer was effective rather than ineffective. The 21-day period was therefore to be taken as meaning 21 days from the date of service.
    1. In the present case, on the assumption that the date of service was 1 July 2019, the words “within 21 days (the relevant period), being by 4 pm on 19 July 2019” were contradictory. The 21-day period ended on 22 July, not 19 July. A recipient of the letter would therefore have had to decide whether KSSL’s solicitors intended to refer to a 18-day period or a 21-day period. In my view, a reasonable recipient of the letter, knowing that the intention was to send a Part 36 offer, would have realised that the reference to 19 July was mistaken and that it was intended to refer to a 21-day period ending on 22 July. The additional words “or at any time thereafter” did not deprive the Part 36 offer of its intended effect. There is no requirement in Part 36 that acceptance of the offer must be time-limited.
    1. Mr Downes also referred to the fact that in an email on 14 August 2019 Mr King’s solicitors acknowledged KSSL’s email dated 27 June 2019 and asked for details of the KSSL’s costs. He submitted that Mr King’s solicitors thereby represented that service of the letter by email was accepted, just as they had accepted service of other documents sent by email, and that if Mr King’s solicitors had made clear at that point that email service was not accepted, the letter of 27 June would have been re-served. In these circumstances, he submitted, Mr King was estopped from denying that the letter was validly served by email on 27 June 2019 with the result that he was not in a position to take issue as to the duration of the 21-day period.
    1. Give my conclusion on the construction of the letter, it is not necessary for me to determine this estoppel issue and, given the late stage at which the challenge to the Part 36 offer was raised, it would not have been possible for KSSL to adduce evidence to address it without an adjournment. Had it been necessary to pursue this issue further, I would have accepted Mr Downes’ submission that the estoppel for which he contended relates to service rather than the requirements of Part 36 itself so that allowing this estoppel argument to be raised would not be contrary to Pepperall J’s conclusion in Essex County Council v UBB Waste (Essex) Limited that rules of estoppel should not be introduced into the operation of the Part 36 regime.
  2. Finally, Mr Downes referred to the possibility of making a retrospective application pursuant to CPR 6.27 to validate the service of the letter of 27 June 2019. Given my conclusion on the correct construction of the Part 36 offer, no such application is necessary. Had an application been necessary, I would have had to adjourn the hearing.
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